Commercial maintenance can be expensive, whether you own a warehouse, an office building, or a retail shop. When you have a Los Angeles triple net lease, your tenants are responsible for all of those repairs. The problem is that most tenants don’t make the repairs they’re supposed to make according to their lease.
Los Angeles Triple Net Lease: A Definition
A triple net lease is named such because there are three things that your tenant is responsible for: the real estate taxes, the insurance on the building, and the costs to maintain the property. The party leasing your building needs to repair and maintain anything and everything during the term of the lease. Your occupants should cover expenses on everything from roofing repairs to electrical and plumbing problems.
Commercial Maintenance Costs
One of the challenges of commercial property management in Los Angeles is that there’s never enough money in a security deposit to pay for the repairs that your triple net tenants didn’t make. The tenants move out and leave behind all this work that should have been done, but wasn’t. For example – we just took over the management of a building where the tenant had been in place for the last 60 years. It was a post office with a 60-year land lease. The tenant was responsible for all the work and maintenance, but they didn’t do any of it. So, when the building reverted back, there were major problems and expensive repairs that totaled over $100,000. There is no $100,000 security deposit.
Overcoming Problems with Triple Net Tenants
The best way to avoid these problems is with a good property manager. When you’re working with a strong management company, you’ll have someone who can visit the property, see that maintenance is needed, and enforce the terms of the lease so necessary repairs are made. In the lease, it will say the tenants are responsible for repairing and paying for these things.
We just began working with a client who owns two large warehouses. They needed repairs done immediately because their insurance was threatening cancellation and they were trying to close on a refinance. So, they quickly made the repairs themselves, and now they’re trying to recover the costs from the tenants. However, they did not give their tenants adequate notice because they were in such a rush. A good property manager would have slowed them down and tried to buy them more time for the refinance. Then, they could have gone to the tenants before the repairs were made.
A well-written lease and a strong property management presence is crucial when it comes to commercial property maintenance. The Association of Industrial Realtors has a great lease and a whole collection of forms that can help you with these matters. If you have any questions or need any help, please contact us at Los Angeles Property Management Group.